CMS proposal seeks to stabilize individual insurance market

Proposed regulations from the Centers for Medicare & Medicaid Services aim to provide short-term stabilization to the individual and small group insurance markets under the Affordable Care Act.

The proposal issued Feb. 15 would make changes to special enrollment periods, open enrollment, guaranteed availability, network adequacy rules, essential community providers, and actuarial value requirements. It also changes the timeline for when insurers would need to get their qualified health plan certification. It represents a first step toward fulfilling President Trump’s Inauguration Day executive order to “minimize the unwarranted economic and regulatory burdens of the [ACA], and prepare to afford the states more flexibility and control to create a more free and open health care market.”

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“Americans participating in the individual health insurance markets deserve as many health insurance options as possible,” Patrick Conway, MD, acting administrator of the Centers for Medicare & Medicaid Services, said in a statement. “This proposal will take steps to stabilize the marketplace, provide more flexibility to states and insurers, and give patients access to more coverage options. They will help protect Americans enrolled in the individual and small group health insurance markets while future reforms are being debated.”

However, the proposed rule, if finalized as is, may not have any dramatic effect on the decision by insurers to serve the individual and small group markets.

“A plan that was going to stay is probably going to stay and be a little bit happier about these regs and a plan that was going to decide to leave, like Humana, would have left anyway,” Caroline Pearson, senior vice president at Avalere Health said in an interview. “I don’t know if it is going to materially change plan participation.”

The proposed rule would shorten open enrollment for plans purchased in the ACA marketplace. Currently, plans can be purchased from Nov. 1 to Jan. 31; the proposal would move the deadline up to Dec. 15.

“We anticipate this change could improve the risk pool because it would reduce opportunities for adverse selection by those who learn they will need services in late December and January; and will encourage healthier individuals who might have previously enrolled in partial year coverage after Dec. 15th to instead enroll in coverage for the full year,” according to the proposed rule.

CMS also proposes to tighten special enrollment by requiring preverification of special enrollment period status for all people applicants. Currently, only 50% of those seeking coverage through special enrollment are verified. The agency also is proposing to limit the plan choices available to individuals who are enrolling via a special enrollment period as a way of minimizing adverse selection.

Another proposal aimed at keeping people covered is one that allows insurers to collect unpaid premiums in the prior coverage year before enrolling a patient in the next year’s plan with the same insurer.

CMS noted in the rule that a recent survey “concluded that approximately 21% of consumers stopped premium payments in 2015. Approximately 87% of those individuals repurchased plans in 2016, while 49% of these consumers purchased the same plan they had previously stopped payment on.”

On the network adequacy front, CMS is shifting the conduct of network adequacy reviews to states, or to an accrediting entity recognized by the Department of Health & Human Services in the case of states that do not have sufficient resources to conduct adequacy reviews. Further, the proposal reduces the minimum percentage of essential community providers (those who serve predominantly low-income and medically underserved populations) in a network to 20% from the 30% instituted in 2015.

CMS said in the proposal that if these rules are finalized, it will issue separate guidance on changes to the timeline for plans to submit their bids for 2018.

Avalere’s Ms. Pearson said that she sees these proposed changes merely as a stopgap measure.

“This reg is intended to stand up the exchange markets and keep them functional while the ACA replacement plan is approved and implemented,” she said. “This is meant to prevent there from being a total loss of coverage before the ACA replacement can be put into effect.”

She added that while insurers will welcome the changes, consumers and patient advocates could push back on the proposal, particularly the actuarial flexibility that could result in smaller networks and shrinking benefits.

Indeed, America’s Health Insurance Plans offered its support of the regulation. “We commend the Administration for proposing these regulatory actions as Congress considers other critical actions necessary to help stabilize and improve the individual market for 2018,” AHIP President and CEO Marilyn Tavenner said in a statement.

The proposed changes were released online Feb. 15 and are scheduled for publication in the Federal Register on Feb. 17. Comments on the proposed changes are due to CMS by March 7.